What You Need to Know About Sweden’s Fintech Scene

May 18, 2017

9:15 am

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Sweden has emerged as a fintech powerhouse in Europe. In 2016 alone, Sweden-based fintech companies closed 35 rounds of funding, according to Breakit. This brings Sweden’s haul to 40 percent of all funding rounds in Europe for the past five years. Sweden now has the highest number of fintech investments per capital.

As a country, Sweden has become the world’s best model for a cashless society. Only less than 2 percent of payment transactions in the country were made using cash in 2015. Many of its banks don’t even allow cash transactions anymore.

As such, cashless payments have become a core vertical to the rise of Sweden’s fintech scene. For peer-to-peer fund transfers, people use Swish which is an app from the collaboration between Sweden’s major banks. For payments to businesses, payment solutions like iZettle, Klarna, and Trustly are the most popular.

Creating Unicorns

Interestingly, all of these companies are homegrown ventures but they are also finding success across border as more countries strive towards cashless. iZettle and Klarna already reached unicorn status while Trustly is poised to do the same after a strong 2016 where the company performed €3.2 billion in transactions. Other fintech segments are also gaining ground. Virtual banking app Tink secured $10 million in funding last year while crowd lending service Kameo secured $1.2 million in funding last year.

Non-fintech unicorn companies also came from Sweden, such as music service Spotify, game developer King (makers of Candy Crush), and Skype.

As such, Sweden is considered to be the second-largest unicorn breeding ground in the world.

Attracting Talent

Swedish fintech companies also credit their talent pool for their continued success. In a recent Ernst and Young event, officers from several Stockholm-based tech companies shared their thoughts on the challenges in human resources that their companies face.

Ulrica Falkenberg, chief human resources officer of Trustly, said, “I think one important thing that we have managed to do is find the truly best talents for those early recruitments. Good people know good people, and want to work with other competent people. A large portion of our new hires come through internal referrals.”

There’s plenty of local talent to tap into as the population boasts of a highly educated population and 40 percent of Stockholm’s inhabitants have at least a three-year post-secondary education. Johan Attby, CEO of Fishbrain, banks on the loyalty of Swedish tech professionals.

“In Stockholm it’s competitive, but if you manage to hire someone, they will stick with you,” he said.

Perks of Company Life

Still, Swedish companies must also be able to look outward to continue their growth. Hiring in tech has become quite competitive these days especially in Europe. The EU allows for professionals to easily relocate to any of the major tech hubs located in its member countries. As such, major tech hubs are all vying to attract the best tech talent especially in light of Brexit.

Aside from Stockholm, Berlin, Amsterdam, and Dublin are all keen on attracting companies and talent to relocate. Berlin and Amsterdam are highly cosmopolitan and many professionals find it easy to adjust to life once they relocate. Berlin even boasts of lower costs of living especially when compared to New York or London.

Not to be left out, Stockholm is a worthy rival to Berlin and Amsterdam. Sweden was named the best country to raise a family, companies offer flexible work hours, there’s also strong emphasis to gender equality and English is also widely spoken. These perks make Sweden a sensible destination for tech professionals looking for a change in environment.

Building a Supportive Ecosystem

Further growth of fintech has come from a convergence of entrepreneurs, the government, and talent. Thankfully, stakeholders are creating an ecosystem that’s nurtures innovation. The Stockholm Fintech Hub, which is a collaboration among KPMG, Partner BLC Avisors, Invest Stockholm, and NFT Ventures, launched earlier this year. The hub offers coworking spaces, a conference center, and educational programs to support fintech ventures.

Fintech in Europe is expected to blow up by 2018 as the Revised Payment Services Directive (PSD2) takes effect. This is expected to change the way banking is done in a major way.

“Over the next five years, I think the lines around fintech are going to become increasingly blurred. Customers won’t differentiate between technology companies, banks or non-banks. We will see a more diverse market and more collaboration between product developers at small companies and tech teams in global banks as they create and distribute new products,” said Oscar Berglund, CEO of Trustly.

This only offers bigger opportunities for fintech companies and Sweden is looking to lead the way.